- Kuya Silver (KUYA) has entered into a letter of intent with First Cobalt (FCC), regarding acquisitions and potential joint ventures
- Under the LOI, the company intends to acquire a portion of First Cobalt’s silver mineral exploration assets in north-eastern Ontario
- The LOI also contemplates the formation of a silver mineral joint venture between Kuya Silver and First Cobalt
- Kuya Silver is up 6.52 per cent and is currently trading for $2.45 per share
- First Cobalt is down 6.67 per cent and is currently trading for $0.28 per share
Kuya Silver (KUYA) has entered into a letter of intent with First Cobalt (FCC), regarding acquisitions and potential joint ventures.
Under the LOI, the company plans to purchase a portion of First Cobalt’s silver mineral exploration assets, known as the Kerr Assets. The proposed acquisition is a package of properties located within the Cobalt camp, in north-eastern Ontario.
The Kerr Assets include the Silverfields property, which was mined by TSX-listed Teck Resources (TECK.A) until 1989. During this time, the property was drilled to a depth of 300 metres and produced over 17 million ounces of silver.
The Kerr Assets also cover eight historic silver mines, located within a contiguous 900-hectare area. The Crown Reserve, Kerr Lake, Lawson, Drummond, Conisil, Hargrave, Silver Leaf and Bailey mines produced over 50 million ounces of silver and 900,000 pounds of cobalt, primarily between 1905 and 1950.
Kuya Silver’s Chairman, Quinton Hennigh, said the company sees considerable opportunity to make a new discovery at the Cobalt camp.
“This camp has long suffered from fragmented, myopic exploration campaigns. We plan to change that by undertaking holistic, property-wide data-gathering and drill targeting,” he said.
“It is a delight to take control over what is one of the highest grade silver districts on earth, on the cusp of a major bull market in silver,” he added.
In addition to this acquisition, the LOI between Kuya Silver and First Cobalt also contemplates the formation of a joint venture between the two companies. This 70-30 joint venture will be formed on the balance of silver mineral assets in First Cobalt’s camp.
For 100 per cent interest in the Kerr properties, Kuya will pay First Cobalt C$4 million, consisting of $1 million cash and $3 million in Kuya common shares.
Within six months of this acquisition, the company can provide a notice of intention to exercise an option to earn up to 70 per cent interest in First Cobalt’s remaining camp assets. This option can be exercised through payment of $1 million in either cash or shares.
However, after exercising this option, Kuya will be subject to a number of earn-in conditions based on expenditures incurred in the years to come.
The two companies hope to complete the initial transaction in 2021’s first quarter, at which point Kuya will own the Kerr Assets outright.
Kuya Silver is up 6.52 per cent and trading for $2.45 per share, as of 12:16pm EST.
First Cobalt is down 6.67 per cent and trading for $0.28 per share, as of 12:09pm EST.
